Monday, January 08, 2007

For those who might not be familiar with the concept, Alex Epstein describes "net neutrality" in his article, "Net Neutrality vs. Internet Freedom".

Net neutrality is the idea that ISPs should not be able to favor some types of data over others; their networks must be "neutral" among all the data they carry. Net-neutrality supporters claim that if ISPs are free to give preferential treatment to certain websites' data, they might drastically slow down un-favored or less-wealthy websites, diminishing their ability to offer content and make innovations. A prominent net-neutrality coalition cautions: "If you are an aspiring entrepreneur, you may be impeded from providing the 'next big thing' on the Internet."

He then proceeds to show exactly what is wrong with that notion.

Unfortunately, it seems that a few top level functionaries in the Federal Communications Commission could have stood to read Epstein's article.

Despite these green lights from other agencies, the [merger between AT&T and BellSouth] faced an endless red light at the Federal Communications Commission. This was more than the typical FCC delay -- the merger had become entangled in the ongoing fight over "net neutrality" regulations. The fight over neutrality rules -- which would bar network owners from charging content providers (such as e-bay and Amazon.com) extra for premium access to their networks -- has been simmering on Capitol Hill for close to a year. In its most recent session, Congress declined to regulate. Nonetheless, two members of the FCC insisted that neutrality regulation be imposed on AT&T as a condition of its approval.

...

In the end, holding the deal hostage was an effective FCC strategy. With its merger on indefinite hold due to the FCC deadlock, AT&T agreed to accept 19 pages of conditions on the deal -- including net neutrality rules. In a December 28 letter to the FCC, AT&T agreed to abide by net neutrality restrictions, specifically committing itself "not to provide or to sell to Internet content, application, or service providers ... wireline broadband Internet access service based on its source, ownership or destination." The next day, the FCC voted 4-0 to approve the merger, subject to the conditions outlined. [bold added]

The article goes on to describe how AT&T managed to limit the damage done, but author James Gattuso correctly points out that these shenanigans are doubly dangerous. First, they could re-energize the drive to foist net neutrality on America. Second, we now have a dangerous precedent: The FCC will feel a little more comfortable the next time it feels like imposing back-door regulations that circumvent normal checks and balances. In that sense it is arguably worse than having had Congress pass a net neutrality law!